Key's speech to the National Party conference

At today’s National Party conference, John Key flagged some changes (some of which weren't changes) he hopes will prevent 16-17 year old's going onto the unemployment benefit. Instead they will have jobs, education or training – and receive a copy of “Playground Battle” from the feelers, as it has the song “Stand Up”, the theme song from the conference.

Actually, they`ll miss out on the feelers – and the training incentive allowance. Some will miss out on most of their benefit too, as it will be put on payment cards that can't be used on cigarettes and alcohol( which they can't legally buy anyway). If they study part time, perhaps if they get accepted in a tertiary institute in a few years, they won’t get $1000 course-related costs, like I did when I was studying.

The Government is going to amend the Privacy Act and the Education Act to require schools to reveal when 16- and 17-year-olds leave during the year, and share this information between the Ministries of Education and Social Development. That is because it has no idea where 16-17 year olds have come from – mind you the MSD has no idea when people leave the country either and are paying thousands each week to ex-pats who they think are in NZ, but have never checked.

The government will also fund community and other organisations to provide comprehensive and concentrated support.

In fact the Government has been doing this for years through programmes like Training Opportunites – but while funded for training, it is measured on employment outcomes, so the policy design wasn’t the best as if they were fully trained and didn’t get work the outcome was less positive. But it is very similar to what Key announced today. Government funding would go to organisations to 'transition' in to work or training, perhaps by building skills or training, but assessed on employment outcomes.

The implication is that these teens do not have a competent adult in their lives to manage their money and to assist them to get ahead in life. So these support providers in community groups will be these competent adults, and in some cases will pay their bills from their benefits and help them get into education, training and work – or the Ministry of Social Development will do it.

Actually, the MSD can pay money for bills for young people directly out of benefits - So why isn’t it?

Further, young people who are receiving these payments will have clear obligations, for example; to attend budgeting or parenting programmes.

WINZ offers budgeting advice. Why aren’t these young people being referred to it? Why is National announcing policy that, in part, it can implement now, but isn’t to a significant degree?

Key says “you measure a society by how it looks after its most vulnerable. You also measure a society by how many vulnerable people it creates”.

Obviously, the more vulnerable people a society creates, the harder that society has to work to look after its most vulnerable. But if “competent adults” are to be place alongside vulnerable teens, God help us if these people are WINZ case managers or similar.

Key said we can’t continue to give young beneficiaries money and trust they will do the right things with it. That approach has not worked.

So can we trust WINZ case managers to do the right thing for all vulnerable teens on benefits, and offer budgeting advice, training opportunities, and bill payments out of benefits?

No policy or legislative change is necessary – just the ability to implement and evaluate it - and tweak it further. It appears they are doing the latter only.

What is the Government doing about this – and what are the oppositions ideas?

The Household Labour Force survey is out.

There are now 159,000 officially unemployed in New Zealand. That's not including those whose benefits are suspended.

There are now 43,000 more people out of work than there were in November 2008.

Nearly 100,000 people are unemployed but are not receiving a benefit.

21% of those on benefits are caring for children under 6.

30.6% of recipients are aged 18 – 24 years.

34% of beneficiaries are Maori.

Maori unemployment is at 16.4% ( up from 15.4 % in February) and Pacific unemployment is at 14.1%, both big increases from 12.6% and 12.8% respectively a year ago.

At the end of June this year, 333,000 working age people were on main social security benefits - an increase of 75,000.

45,000 of them are teenagers.

19,000 people lost their jobs in the past three months.

In the last three months 7000 people have given up looking for work and have dropped out of the labour force.

The number of those on benefits has increased 29% in the 2 years ending June. That's one in three extra beneficiaries.

That's not including the "hidden unemployed" -the students, those whose partners work, those who work part time but want to work full time.

And the chances that you are one of the above is the highest since 1999.

What’s worse, there are now 255,700 jobless (either unemployed, not ‘actively’ seeking work, or not able to start work immediately).

Treasury can't forecast unemployment

In December Treasury said unemployment would peak at a 7%. John Key said that Treasury was being too pessimistic. Figures released shows that unemployment is now 7.3%. The last time it was that high National was in Government, too. But there is one major difference: the 10 years Labour spent getting people off the unemployment benefit ( and off ACC) to sickness and invalids benefits:
[h/t Lindsay Mitchell]

I don't think unemployment has peaked yet - and the Government is silent on what to do about rising unemployment except blaming it on population growth - but 25.5 percent of all job seekers have been out of work for more than 6 months.Anyone know how many jobs the job summit created?

Employment is going to be a key issue at the next election. The question voters will be asking is: Can Labour do any better? I think it can.

Not exactly a luxurious life

I wouldn’t get too concerned that the government is planning to stick 7000 unemployed people into McDonalds. The scheme is over a five years period, equating to 26 per week on average. That is if the 7000 figure is reached. What if they only get 4000 into McDonalds – that’s about 15 per week.

And that is about how many people are being employed at McDonalds every week anyway, due to the high staff turnover. But this deal is not driven by a desire to get people work. It is driven by a desire not to pay so much money on benefits, as John Key explains:

When we spend a lot on benefits it means there are a lot of New Zealanders not really earning a lot. Life on a benefit is not exactly a luxurious life.

When lots of people work at McDonalds, it means there are a lot of New Zealanders not really earning a lot. Working at McDonalds is not exactly a luxurious life.

What if they were to offer a McDonalds fulltime position - 30 hours a week in WINZ language - to a main unemployed breadwinner with children? If they were to get $15.00 an hour, they`d get $450 a week ($23,400 a year), compared with a benefit payment of $18,850 a year before tax. That's an extra $87.50 a week.

Beneficiaries can earn $80.00 each week and retain the benefit. Effectively squared up. But the person in this example will be spending money on transport to get to work so he is worse off by working at McDonalds.

Would you do it?

Unemployment at 4.6% - more than 100,000 out of work but just 30,000 on the dole

Unemployment has risen to a five year high. But the number of people employed increased by 21,000, driven by males in part time employment. I wonder how many of them get the abated dole as well.

I also wonder how many more are not eligible for the dole because either their partner works, or is on ACC, or both partners work part time and are thus ineligible for the dole, given that just 30,000 get the dole.

Aussie exodus to get bigger?

Nearly 100 people a day are moving over to Australia to live. Compared with last year, more than 8000 more have left to go and live in Australia.

It seems that everyone knows someone who has moved to Australia to live in the past three years – myself included. We have family who moved to Australia for a better life and better income last year. They’re not coming back in a hurry.

But it could get worse – an average of 193 people are expected to lose their jobs. That’s not every week, that’s an average every day for the next 15 months. If the international recession does not worsen Treasury expects 68,000 to lose their jobs – that’s only about 150 on average every day.

5000 more on the dole

The September benefit figures are out and since June more than 11,000 extra people are receiving benefits. Of the main benefits, 5000 more are on the dole, there's 2000 more sickness beneficiaries, 1000 fewer invalids beneficiaries and 2000 more on the DPB.

And Ruth Dyson is very quiet about it - she doesn't care, she`s only going to be the minister for the next few weeks.

What is interesting is that there is a higher proportion receiving the dole for less than a year, but a lower proportion of sickness beneficiaries on that benefit for less than a year. Perhaps those working at Work and Income can't transfer people from the unemployment benefit to the sickness benefit fast enough. So many are becoming unemployed there's no time.

One in ten Maori expected to be looking for work

Thanks to the economic downturn, unemployment is expected to to rapidly increase - and it appears Maori will bear the brunt of it. According to the Maori Party unemployment is expected to increase by 50 percent and given Maori unemployment according to the Household Labour Force survey is 7.1 percent, one in ten Maori will be telling the survey they are looking for work.

Actually one in ten could be on a benefit as whenever there is an big increase in unemployment in an economic downturn, a substantial proportion of that increase is Maori.

It may get pretty bad in Australia where one in seven Maori live. They`ll be making a decision whether to come back to New Zealand or whether to stay in Australia if they lose their jobs. And if lots of Maori think it is better to be unemployed in New Zealand than unemployed in Australia guess what is gong to happen to our welfare bill?

One in five unemployed are on a training benefit

I have been saying for a while that much of the reason the unemployment benefit numbers are low is because of the amount of people on training benefits. Those on training benefits are excluded from official dole figures. Training benefits last from six weeks to more than a year, depending on the type of training.

About one on five of those who would normally be on the unemployment benefit are on a unemployed training benefit (UBT ), thus significantly skewing the dole figures to a greater extent than those who are transferred from the dole to sickness and invalids benefits.

For example, at the end of June, 23000 were in receipt of an unemployment benefit and 6368 were in receipt of a training benefit. Some are transferred from other benefits like sickness, but these are few. Ths is because training benefits require you to be in training for 30 hours a week and if you can't work 30 hours a week because of depression or whatever, you shouldn't be able to cope with training for that period either - but some slip through.

And what happens after they finished training? What proportion enter sustainable employment? Well, the MSD staff won't say, because they don't know. However they do know that many go on to other training options or onto the sickness or unemployment benefit again. Some get part time jobs and have their benefit abated. But the MSD has no idea how many people get jobs or go to further training such as university as a result of training they put their "clients" though.

It is important to note that these figures do not include those under 18 who would normally be on the independant youth benefit. And given that half all on the unemployment benefit are over 40, and the vast majority of those on training benefits are under 40, this could mean that of all those under 40 who are eligible for the unemployment benefit and are receiving income from Work and Income, up to a quarter could be on training benefits or the reason half of all unemployment beneficaries are over 40 is because fewer of those over 40 are trained because they are tougher to train.